Chapter 6: Benefits Toward Education

EDUCATION BENEFITS

At the beginning of your service as an AmeriCorps VISTA member, you elect to receive the end-of-service stipend or the Segal AmeriCorps Education Award (education award) as your post-service benefit. The education award may be used to repay eligible student loans or pay for educational costs at eligible institutions of higher education.

By law, only VISTA members who are either: US citizens, US nationals, or lawful permanent resident aliens (sometimes referred to as “lawful permanent residents”) are eligible to receive an education award. Persons legally residing in a state, but who are not US citizens, US nationals, or lawful permanent residents, are only eligible to receive an end-of-service stipend.

VISTA members and Leaders select a post-service benefit prior to attending Pre-Service Orientation or their start of service. If you initially choose the education award, you may change your election to the stipend any time before the end of your tenth month of service on the my.americorps.gov home page under the “Edit End-of-Service Option.” You may not change from an end-of-service stipend to the education award. VISTA Summer Associates do not have the ability to change their end-of-service benefit selection once selected.

IF YOU ELECT THE END-OF-SERVICE STIPEND

If you elect the end-of-service cash stipend, you may be eligible for the following education benefits:

Deferment of eligible student loans

Cancellation of Federal Perkins Loans

STUDENT LOAN DEFERMENT DURING SERVICE

As a general rule, VISTA members may obtain a deferment (discussed later in this chapter) of payments on the principal of any federally guaranteed student loan for the length of their AmeriCorps VISTA service. For federal student loans, interest deferments and/or subsidies may also be available. The terms and conditions of available deferments differ depending on the type of loan, the date the loan was disbursed, and the policies of the individual loan holder. Some older federal student loan programs allow VISTA members a categorical deferment. Newer federal loan programs may require that you apply for an “economic hardship” deferment.

CNCS does not grant student loan deferments; loan holders do. To apply for deferment, please follow the guidance on the deferment request form specific to your loan. You can find supporting documents often needed to apply for deferment, such as your VISTA Currently Serving Certification letter and recent earnings statements, on your my.americorps.gov member homepage.

If your deferment request form requires signed verification of your status as a VISTA member, send the form to the VMSU for certification:

Depending on your loan type, you may not be responsible for paying the interest that accrues on your loan during the deferment period. Please contact the Federal Student Aid Information Center at 800-433-3243 or visit www.studentaid.ed.gov for more information.

POST-SERVICE CANCELLATION OF FEDERAL PERKINS LOANS

If you choose to earn an end-of service stipend, you may be eligible for cancellation of a portion of your Federal Perkins Loan for completion of a full year of AmeriCorps VISTA service. However, you may not receive an education award and related interest benefits from the National Service Trust (described below) for a term of service and have that same service credited toward repayment, discharge, or cancellation of other student loans.

When you elect the stipend, 15% of your total Perkins Loan obligation plus the accrued annual interest will be canceled for the first and second years of completed AmeriCorps VISTA service. For the third completed year of service, 20% of your total Perkins Loan obligation plus the accrued annual interest will be cancelled.

To determine which student loans may be eligible for cancellation and to receive forms, contact the Federal Student Aid Information Center at 800-433-3243 or visit www.studentaid.ed.gov.

IF YOU ELECT THE SEGAL AMERICORPS EDUCATION AWARD

The Segal AmeriCorps Education Award is equal to the maximum amount of the Pell Grant during the fiscal year in which the member begins service. (The federal government’s fiscal year is October 1 – September 30). The amount of the Pell Grant can change each year. Hence, the full education award can change to match future changes to the Pell Grant amount.

NATIONAL SERVICE TRUST

The National Service Trust is an account in the U.S. Treasury from which CNCS makes payments to education and financial institutions on behalf of AmeriCorps participants who have successfully completed a term of service in an approved national service position. The Office of the National Service Trust, frequently referred to as the Trust, is the department within CNCS that manages all functions related to the education award. (See the end of this chapter for resource information provided by the Trust.)

EDUCATION AWARD AMOUNT

The Segal AmeriCorps Education Award amount is tied to the maximum amount of the Federal Pell Grant. The maximum amount of the Pell Grant can change each year. Hence, the full education award can change to match future changes to the Pell Grant amount.

Occasionally, part-time, reduced part-time, and other special programs are offered (for example, a Summer Associate program) that include a “less than full year” award. This award is reduced proportionally to reflect the length of the program. Such education awards count towards the aggregate value of two awards an individual may be eligible to receive.

HOW TO QUALIFY

As an AmeriCorps VISTA member, you are eligible to receive an education award from the National Service Trust if:

You successfully complete a term of service in an approved national service position; and

You are a citizen, national, or lawful permanent resident alien of the United States.

Your election is made when you complete the End-of-Service Benefit selection on your my.americorps.gov member homepage at the beginning of each term of AmeriCorps VISTA service and indicate whether you want to receive an education award or an end-of-service stipend. If you elect the stipend benefit at the beginning of your service, you may not change your mind and elect the education award. However, you can change your initial election of the education award to the stipend at any time before the end of the tenth month of service.

RESTRICTIONS AND LIMITATIONS

Number of Awards

While you, as a VISTA member, may serve up to five years as a VISTA, you can only receive the value of two education awards. For any additional terms served after you have earned two full education awards, you may select the end-of-service cash stipend as the end-of-service benefit. If you serve less than full-year VISTA terms, you may be able to earn additional pro-rated awards (not to exceed the aggregate value of two full awards). Alternatively, you may also elect to receive a $0 (zero) value education award; doing such could result in the accrual of interest benefits and qualify you for loan deferment.

Time Limit on Use of Education Award

You must use each education award within seven (7) years after the date you complete your term of service. You can apply for an extension if:

You were unavoidably prevented from using the education award during the seven-year use period for reasons such as:

Serious illness or disability experienced by you

Death or serious illness or disability of someone in your immediate family (mother, father, sibling, spouse, child, grandparent, grandchild)

Important service records maintained by the program were destroyed or are inaccessible

You successfully completed a subsequent term of service in another approved AmeriCorps position that fell within the seven-year use period of your first education award

You served in Peace Corps or in the military for a period of time that fell within the education award’s seven-year use period

Requests for extensions are submitted via my.americorps.gov and must be submitted before the Education Award expires.

Ineligibility for Controlled Substance Conviction

An AmeriCorps VISTA member who is convicted under federal or state law of the possession or sale of a controlled substance is not eligible to use the education award from the date of the conviction until the end of a specified time period based on the type of conviction. To learn more about how convictions for the possession or sale of controlled substances affect an education award recipient's ability to use that award, review 45 CFR §2526.30. You may also contact the National Service Hotline, toll free at 800-942-2677, and ask to speak with someone at the Trust.

PRORATED SEGAL AMERICORPS EDUCATION AWARD

In rare circumstances, AmeriCorps VISTA members who leave service early for a compelling personal circumstance and who have elected to receive an end-of-service Segal AmeriCorps Education Award may qualify for a prorated education award.

The CNCS State Program Director has the authority to approve a member's eligibility for a prorated education award if the member leaves service early because of a compelling personal circumstance. A detailed discussion of situations that constitute a compelling personal circumstance and other extenuating circumstances that qualify for such a prorated award is presented in Chapter 12: Administrative Policies, under the section, "Early Termination of a VISTA Member for a Compelling Personal Circumstance."

If you leave AmeriCorps VISTA service for a compelling personal circumstance (or for a public policy reason) discussed in Chapter 12, and you have completed at least fifteen percent of the required term of service, you are eligible for a prorated portion of the education award that corresponds to the portion of your term served. For example, if you began a term of service on or after October 1, 2018, and served 219 calendar days (which is 3/5 of a service year), you would earn an education award of $3,657 ($3,657 = 3/5 of $6,095).

Members must complete at least fifteen percent of the required term of service in order to be eligible for a prorated end-of-service benefit (55 days for full year members; nine, ten, or eleven days for Summer Associates). Such education awards count toward the aggregate value of two awards that an individual may be eligible to receive during his or her lifetime.

Early Departure for another AmeriCorps Program

If you are accepted into another AmeriCorps program and are required to begin training or service in the other program prior to the conclusion of your AmeriCorps VISTA service, you are also eligible for a prorated education award, provided you served at least 335 calendar days as an AmeriCorps VISTA member.

QUALIFIED LOANS

You can use your education award to repay qualified student loans you have or may acquire. Generally speaking, a "qualified student loan" is any federally backed student loan that is in the VISTA member or alumni's name. The Trust's legislation has been modified to include loans made directly to members by state agencies, such as the Alaska Commission on Postsecondary Education or a state university or college. This adjustment is subject to change each year with CNCS's appropriation statute. CNCS cannot authorize payment of nonqualified loans.

If you do not know if your loans are qualified, ask your lenders. Otherwise, you may earn an education award and be unable to use it for the purposes you require. There should also be a citation on the loan papers, referring to Title IV of the Higher Education Act, Title VII or VIII of the Public Health Services Act, or the Alaska Commission on Postsecondary Education.

There may be student loan programs offered by schools that are not qualified. Members must be sure to ask their loan holders to see if the loans are qualified using the definition in the Trust's legislation. They should get written confirmation if there is any question. A loan program that pays off previous qualified education loans and creates a new loan for the purpose of offering a single payment option, such as credit card consolidation, is not a qualified loan. Your education award cannot be used to repay this type of loan. There is a federal consolidation loan, however, specifically for this purpose that is a qualified Title IV loan. Members who want to consolidate qualified student loans need to make sure that they do it through a Title IV Federal Consolidation Loan if they want to use their Education Award to repay it or have the interest paid on it. If consolidation occurs after service, you not be eligible for an interest accrual payment.

If your schools of interest are not listed, ask these schools to consider matching the AmeriCorps Education Award or offering special opportunities to former AmeriCorps VISTA members.

ELIGIBLE INSTITUTIONS

U.S. Schools

For purposes of the education award, an "eligible institution of higher education" is one that has a Title IV Program Participation Agreement with the U.S. Department of Education. (Title IV refers to a section of the Higher Education Act that authorizes student aid.) This means that the school participates in federal student aid programs (i.e., the institution has an agreement with the U.S. Department of Education whereby students are eligible to receive federal financial assistance to attend the school). This assistance includes Pell Grants or one of the federal loans listed under "Common Qualified Student Loans."

Veterans who have earned an AmeriCorps Education Award may use the award for education, apprenticeship, and on-the-job training at institutions that have been approved for educational benefits under the Montgomery G.I. Bill (referred to as G.I.-approved schools).

A school may be fully accredited and offer quality graduate degrees, but unless the school is G.I.- approved (veterans only) or participates with the U.S. Department of Education in Title IV financial assistance, the education award, by law, cannot be used there. You should make sure the school you wish to attend, or the student loan you expect to repay to an existing school, is qualified before you select the education award.

It is not possible to determine whether a school is Title IV merely by the name of the school. Most two- and four-year institutions in the United States are Title IV schools. Thousands of technical and trade schools are Title IV as well. Art schools, beauty schools, and truck driving schools may be Title IV. To become a Title IV school, an institution has to meet certain requirements and obtain a Title IV Program Participation Agreement with the U.S. Department of Education. Many of the Title IV schools are also G.I.-approved.

To Find Out If a School Is Eligible

Ask the financial aid office if the school is a Title IV institution.

Learn if students who attend the school are eligible to use Pell Grants, Perkins Loans, or Stafford Loans to attend the school. If students are eligible for these loans, it is a Title IV school. These loans are examples of some of the most common types of Title IV assistance.

Call the toll-free number at the U.S. Department of Education's Federal Student Aid Information Center between 9:00 a.m. and 8:00 p.m. (Eastern Standard Time), Monday through Friday. That number is 1-800-433-3243. You also can conduct an online search at the Department of Education's Web site at www.fafsa.ed.gov.

Foreign Schools

The education award may be used to attend many schools outside the United States. You should always check to see if the school qualifies before enrolling if you intend to use the education award to pay for school.

If the school outside the United States participates in the U.S. Department of Education's Direct Lending Program, the Segal AmeriCorps Education Award can be used there. You can find out if a particular school participates by calling the Department of Education at 1-800-433-3243. Individuals who use this number should ask if the school participates in the Direct Lending Program. The caller should have the name and location of the school before making the call. This number is not for questions concerning using the education award; it is to see if a foreign school participates in the Federal Family Education Loan (FFEL) program.

Another way to approach attending schools overseas is to obtain a qualified student loan to attend the foreign school and use the education award to repay the loan. The loan would be paid like any other qualified student loan.

Also, many Title IV post-secondary institutions in the United States offer educational opportunities abroad. As long as the member is considered by the qualified U.S. school to be a student at the school and the payment goes to the U.S. school, this is an allowable use of the education award.

QUALIFIED EXPENSES TO ATTEND SCHOOL

The Segal AmeriCorps Education Award can be used to pay the portion of a member's cost of attendance that is not covered by other sources of financial aid, such as scholarships, loans, grants, and tuition or fee waivers. The U.S. Department of Education developed the term "cost of attendance" for use by Title IV schools. Schools use it whenever a student applies for federal financial assistance. It is the school's estimate of what it will cost for a student to attend for a specific period of time.

For a full-time student, qualified expenses must be attributable to a course at the certifying institution and can include tuition and fees, an allowance for books, room and board, transportation, and other expenses. It is important to note that every Title IV school determines the cost of attendance for its students. This is not an amount determined by the member or by the Trust in CNCS. The cost of attendance should be used by the school to calculate the amount for which the student is eligible to use the education award.

The AmeriCorps Education Award can be used for that portion of the cost of attendance that has not already been covered by other sources of financial assistance.

The cost of a computer may be included in the cost of attendance. The school's financial aid office will know if that particular school includes computers in the cost of attendance. Students should be able to learn the cost of attendance from the financial aid office before submitting their payment request.

If you are a veteran, courses and training programs eligible for payment through the Montgomery GI-Bill are eligible for AmeriCorps Education Award payments. The institution or training establishment will have a VA-approved Certifying Official who will determine the eligible expenses.

BOOKSTORES AND THE EDUCATION AWARD

The law requires that the Segal AmeriCorps Education Award be designated to an eligible school (and holders of qualified loans). The Trust requires you to communicate with the financial aid office of the eligible school you wish to attend regarding disbursement of the education award for bookstore purposes. The financial aid office monitors financial assistance received by students and is able to determine how much of a student's award the member is eligible to use and whether a student's cost of attendance has been met by other sources. The financial aid office can legally represent the school in verifying that certain requirements are met. A bookstore cannot do this.

To avoid a series of small payments to a bookstore throughout the semester, the member should consult the financial aid office for the calculated budget figure for books and supplies for the term and request that amount as a lump sum.

For more information and greater detail, please search “How to Use Your Education Award” on the VISTA Campus.

LOAN POSTPONEMENT AND INTEREST PAYMENT

FORBEARANCE OR DEFERMENT?

National service is only one of several circumstances that allow borrowers to postpone the repayment of their qualified student loans. Other situations include being a student, serving in the military, being unemployed, teaching in specific high-need areas, or working as a volunteer with a nonprofit organization. Some of these postponements are called deferments, and some are called forbearances.

Deferment is a postponement of repayment of your student loan for the length of your AmeriCorps VISTA service.

For Federal Perkins Loans, subsidized Stafford Loans under the Federal Family Education Loan (FFEL) program, and subsidized Direct Stafford Loans, you do not have to pay principal or interest during deferment.

For unsubsidized FFEL Stafford Loans, unsubsidized Direct Stafford Loans, FFEL PLUS Loans, and Direct PLUS Loans, you can postpone paying principal, but you are responsible for the interest.

If you are not eligible for a deferment, a forbearance permits you to postpone or reduce payments for the length of your AmeriCorps VISTA service. Unlike deferment, for which the federal government pays the interest for you, interest continues to accumulate for loan forbearance. If you do not pay the interest as it accrues, it will be capitalized.

Special requirements and conditions are associated with each deferment and forbearance, depending on the type of loan and when it was made. These special conditions may include time limitations and quarterly interest payments.

AmeriCorps VISTA members who are earning an education award may be eligible for loan forbearance or deferment based on the fact they are earning an education award or based on one of the other circumstances described above. There are several advantages for obtaining forbearance based on national service versus another type of forbearance. Forbearance based on national service does not count against the time limit associated with other types of postponements. Interest payments are not required during the term of national service, even on a quarterly basis. The National Service Trust, however, only pays the accrued interest for the terms of service for which you elected the education award. Remember that any accrued interest paid on behalf of a member is subject to income taxes.

If members wish to learn more about other types of postponements for which they might be eligible, they should review their promissory note or contact their loan holder or the U.S. Department of Education.

LOAN FORBEARANCE

AmeriCorps VISTA members who earn an education award are eligible for a type of student loan postponement called forbearance. You may be eligible to postpone the repayment of your qualified student loans while serving as an AmeriCorps VISTA member.

During forbearance based on national service, interest continues to accrue. If you successfully complete your term of service and earn an education award, the Trust pays all or a portion of the interest that accrued on your qualified student loan during this period. This accrued interest paid by the Trust, like the education award, is subject to income taxes.

To place a loan in forbearance, you need to request it from the loan holder. Only the loan holder has the authority to grant forbearance. In the forbearance process, the National Service Trust merely verifies that you serve in an approved national service position. If the loans are in default, the loan holder is not required to place the loans in forbearance. There may be ways, however, to bring a loan out of default to make it eligible for forbearance. Contact your lender for further information.

Process for Requesting Forbearance

You, as the borrower, must request any of the various types of postponements for qualified student loans. This process is automated through my.americorps.gov. You can create a forbearance request under "My Education Award" on your my.americorps.gov homepage. Only the loan forbearance form accessible electronically through your my.americorps.gov account may be used for a forbearance based on your AmeriCorps VISTA service.

Occasionally, a loan company may ask for additional information or require you to complete one of its forms. After filling out the borrower's portion of a forbearance request form, you should submit it to the Trust Office (the address is listed at the end of this chapter) for verification that you serve in an approved national service position. Be sure to make a copy for your records.

Be sure to include the loan holder's name and address and your service dates. Once the Trust receives the request (through my.americorps.gov or the lender's form), it certifies that you participate in an AmeriCorps VISTA project and then forwards the documents to the loan holder. You can track the status of your request for forbearance and see when it has been processed. Normally, the loan holder notifies you when forbearance has been granted. If you have not heard from the loan company within three weeks from the time you submitted or mailed the form to the Trust, you should call the loan holder (most have toll-free lines) to make sure the paperwork was received and forbearance was granted.

Perkins Loans, State Agency Loans, and Forbearances

The Segal AmeriCorps Education Award can be used for two types of qualified student loans not currently covered by the federal laws requiring loan holders to approve forbearance based on national service. There is currently no federal requirement for a loan company to grant forbearance for federal Perkins Loans or loans issued to a member by a state agency.

If an AmeriCorps VISTA member finds that a holder of either of these two types of loans will not grant forbearance based on national service, there may be other postponement options available. For example, the member may be eligible for a deferment or forbearance based on economic hardship during the service period. Members should contact their loan holders if they wish to learn about other types of postponements for which they may be eligible.

Because both the Perkins Loans and loans issued by a state agency are included in the National Service Trust's legal definition of qualified student loan, AmeriCorps VISTA alumni can use their education awards to make payments against them.

PAYMENT OF ACCRUED INTEREST

You are eligible to have the National Service Trust pay all or a portion of the interest that accumulates on your qualified student loans while you are earning your education award. These payments are made in addition to the education award and they are not deducted from your education award balance. These interest payments, however, are shown on your account statement. To be eligible to have accrued interest paid, the loan must have been in forbearance or deferment during the service period and the member must have successfully completed a term of service.

The Trust cannot pay for interest that accrued outside a member's service period. It also cannot pay interest if the member did not earn an education award. Members who elect the stipend are not eligible for this interest payment.

Generally, the Trust pays all interest for full-time members who complete their term of service and a portion of the interest for members who had to end their service early for compelling reasons and have received a prorated award. The portion that the Trust pays is based on a formula contained in the regulations that govern the National Service Trust.

Process for Getting Interest Paid

The Trust pays the interest when it has both of the following:

Verification from the CNCS State Office via the Future Plans Form that the member has completed service and is eligible for an education award

An AmeriCorps Interest Accrual Request Form, accurately completed by the loan holder, that shows the total amount of interest accrued during the member's term of service

You must initiate the process to have your interest paid in your my.americorps.gov account. The Trust cannot make any payments on your behalf until the CNCS State Office verifies on your Future Plans Form that you have completed service. Once verification occurs, a Trust account is automatically established for you. These actions may occur only after your completion of service. You need to make sure that your loan holder informs the Trust of the total amount of interest that accrued during your service period. To have this interest information sent to the Trust, you should create an Interest Accrual Request in your my.americorps.gov account, under "My Education Award." After you certify and submit the form, it will be forwarded to your loan holder(s). Each loan holder completes the lender portion of the form and forwards it to the National Service Trust. You can track the status of your request and see when a payment has been made.

TAX IMPLICATIONS

FEDERAL TAX

The Internal Revenue Service (IRS) has determined that payments from an education award and interest payments made on behalf of a member during a particular calendar year are considered taxable income in that year. These payments are reported to the Internal Revenue Service if they total at least $600 in the year. By January 31, the Trust will send you an IRS Form 1099-MISC that states the amount reported to the Internal Revenue Service. This amount must be included as income on your tax return. The Trust does not withhold any amount from the Segal AmeriCorps Education Award. Payments not processed by the Trust within a given calendar year are not included on your Form 1099-MISC even though your payment request was submitted before the end of the year.

TAX CREDITS

As a result of the Taxpayer Relief Act of 1997, many AmeriCorps VISTA members who use their Segal AmeriCorps Education Awards may obtain substantial relief from federal taxes. This relief comes in the form of the Hope Scholarship Credit and the Lifetime Learning Credit, as well as in the form of a deduction for certain interest payments on qualified student loans. These benefits are generally available to people who are paying qualified tuition and related expenses to an eligible institution of higher education either for themselves or for members of their families.

CONTACTING THE NATIONAL SERVICE TRUST

The National Service Hotline can answer many questions about AmeriCorps education benefits. The National Service Hotline has a toll-free number through which customer service representatives answer general award questions or provide detailed information about specific awards or payments. Representatives also provide assistance for using the My AmeriCorps Online Payment System. Customer service representatives are available Monday through Friday from 9:00 a.m. to 7:00 p.m. (Eastern Standard Time) during January and May through September. The hours of operation from February through April and October through December are Monday through Thursday from 9:00 a.m. to 7:00 p.m.; the Hotline is closed on Friday during these months. The toll-free telephone number is 800-942-2677. Questions may also be submitted at the National Service Hotline's Ask a Question page, or to:

GRADUATE RECORD EXAMINATION FEE REDUCTION PROGRAM

The Educational Testing Service, which administers the GRE (Graduate Record Examination), makes available to colleges and universities a limited supply of GRE Fee Reduction Certificates. The decision to issue the Fee Reduction Certification is up to the college or university to which you apply. To apply for a GRE Fee Reduction Certificate, contact the financial aid office of the educational institution that interests you to see if you qualify. Be sure to tell them about your experience serving as an AmeriCorps VISTA member. To learn more about the GRE Fee Reduction Program, visit http://www.ets.org/gre/revised_general/about/fees/reductions